Some people like to give Zumiez grief for being “mall” stores, but when you compare their conference calls with those of some of their competitors what comes through is a surprisingly core attitude about the stores, the brands, and the customers. After the prepared statements Zumiez CEO Rick Brooks and CFO Trevor Lang answered questions and here are some of the highlights
- October had the worst monthly comps in the company’s history.
- Footwear was the strongest segment, apparel was the worst, and skate hard goods are seeing “tough comps.”
- Third quarter gross margins were down 200 basis points driven almost entirely by apparel since the June when everything got promotional.
- New stores (07-08) have been performing at about 65 percent as compared to established stores.
- Company is targeting opening 58 new stores, only 20 percent of them are in the “housing states” and no new stores in Nevada or Florida.
- Snow goods are off to a slow start. Rick Brooks said “We are concerned about the market for snow hardgoods. We’re working very closely with our suppliers. We’re also going to be more aggressive from the price perspective and trying to move the product out the door.
- The company has lowered its costs across the board and stock and performance based incentives are a large part of that.
- Customers continue to drive the brand selection and the business. “Again, our approach is to do what our customers tell us to do,” Brooks said. “The customers are who drive that for us. If the custermers demand more then we will buy more.”
- Zumiez remains dedicated to its small vendors. “In most cases we are our small vendors biggest customers,” Brooks said. “If we have cash then we are a big driver of their liquidity.”
- Zumiez is brand diverse so any problems at some of the larger action sports apparel companies won’t have much affect on them. “Our largest single brand only represents 7 percent of our sales,” Lang said “But we are not so confined to a certain vendor that if one were to go away it would not hurt us.”
- One of Zumiez goals is to get clean on inventory by the end of the year and they feel they have been conservative enough this year to do that.
- The company is still investing in their IT organization and in their ecommerce business because that is an area in which Zumiez continues to see growth.
- There are plans to get very promotional in Q4 however they are not going to simply put everything on sale. “Our promotions are based on a very fine category brand analysis and very focused on how we attach promotions.
The most impressive thing about all of this is the way that Brooks and Lang appear to be all over the current market conditions and appear to have done everything they could to prepare for what everyone knows is going to be a bad quarter. The thing that keeps us optimistic on Zumiez is the fact that they’re still running with absolutely no debt.
